Dear CCI followers,
Many of you have over the years (and also in the past month) have inquired about why Russia isn't getting their pervasive corruption under control. I too have been impatiently waiting to see if it would ever happen. Looking back on the time when we at CCI ran our "anti-corruption program", I now realize there was no way corruption could have been tackled at that time. It was too pervasive––every official was on the take, every business owner, had to pay up or pay down to keep their business afloat. This was rooted in the way Russian people had had to live for centuries, paying up or down to authorities to survive.
In 2004 we took 100 Russian entrepreneur leaders to Washington, DC to visit with Embassies of European and Asian capitols––to learn how other nations had brought corruption under control. From these extraordinary meetings in our nation's capital, CCI's Russian entrepreneurs created a powerful set of recommendations to President Putin and presented them in the Kremlin. They spoke nationwide TV (Channel 1) to the nation on prime time––on the coveted Pozner Show. Putin began speaking about corruption on television, Russian newspapers took note of this most unusual happening in DC––but still little concrete action occurred. (Read about this exciting effort in my book, The Power of Impossible Ideas: Ordinary Citizens' Extraordinary Efforts to Avert International Crises" .)
A couple of days ago I noted happily that Russia's Minister of Defense was being terminated. Today the following article appeared––and I'm SUPER delighted. Not only is it just one very high-level position being "outed", but it appears there is a rash of top-level positions which are being terminated––and this could be that a major crackdown is in process. Let's watch it closely to see how far Putin goes with this housecleaning.
Wave of corruption scandals overwhelms Russia
By Itar-Tass World Service writer Lyudmila Alexandrova
MOSCOW, November 14 (Itar-Tass) A wave of scandals related to corruption has overwhelmed Russia in an almost literal sense of the word. Their number has been mushrooming in the past days and practically all the news stories turning into subjects of intense discussions are related to the issue in one way or another.
Remarkably, these stories are bootstrapped by the state, not by the media or the opposition.
Last week saw the emergence of reports on embezzlements in the Oboronservice holding company set up by the Defense Ministry. They led up to the institution of criminal cases and unseated the Defense Minister, Anatoly Serdyukov.
This was followed by revelations about misappropriations of funds in the process of designing the GLONASS global navigation satellite system and during preparations for the summit conference of the Asia Pacific Economic Cooperation forum /APEC/, which was held in Vladivostok in September.
Inspections at the Ministry of Regional Development and the Healthcare Ministry added up to the situation around Rosoboronservice.
The number of criminal cases linked in one way or another to abuses in the latter company has reached two dozen by now. The whole thing started out with suspicions of swindling during the sales of land plots and property belonging to the Defense Ministry.
The damage was estimated at almost 3 billion rubles /USD 1=RUB 31.7/. Former chief of the Ministry’s Department for Property Management Yevgenia Vassilyeva, who is said to be Anatoly Serdyukov’s intimate friend, and several of the former minister’s female relatives, including his own sister, are suspected of purchasing elitist apartments. The main question is where the officials took the huge bags of money to pay for such housing /the price of an apartment of that category stands at 700 million rubles or slightly more than 22 million U.S. dollars on the average/. Nor is it clear where from the Defense Ministry took an elitist apartment block in downtown Moscow.
Simultaneously spotlight was given to the facts of selling off the Defense Ministry’s installations in the Murmansk region at dirt-cheap prices. The case in hand is an oil refining compound, which was transformed into a joint-stock company and its property was privatized for a song.
The latter transaction inflicted an estimated damage of 240 million rubles.
In the meantime, more materials on the sales of real estate by Defense Ministry officials have been submitted to investigation agencies. They concern a compound of 70 major buildings and installations with a total floor space of 36,000 square meters located on an area of almost 20 hectares in the prestigious Odintsovo district west off Moscow City.
Reports say the price of the compound was purportedly under-stated by a billion rubles.
Other corruption cases were thrown into limelight, too. Designer-in-Chief of the GLONASS system, Yuri Urlichich, was relieved of duties and police sources reported an exposure of large-scale embezzlement schemes at Russia’s Federal Space Agency /Roscosmos/ committed in the process of implementation of the GLONASS project. The amount of the monies embezzled stood at around 6.5 billion rubles.
The top executives of the joint-stock company Russian Space Systems /RKS/ issued forged contracts for R & D works, which were performed de facto by the company’s staff members while the money was misappropriated, police sources said.
Russia’s Accounting Chamber, the most senior auditing agency, puts the financial abuses committed during the preparations for the APEC summit in Vladivostok at 15 billion rubles. Only one third of the facilities that had been paid up were completed by the beginning of the summit and some facilities remained unfinished.
Some customers did not have the official conclusions of expert groups for the project documentation and some contractors got payments prior to the signing of the contracts, the Accounting Chamber officials said.
The main person involved in the case, former Deputy Minister of Regional Development Roman Panov has been arrested.
Vitaly Teslenko, the Healthcare Minister of the Chelyabinsk region was arrested right in the sauna and an aide to the regional governor, Ivan Sorokun, was arrested along with him there, too. Both men are charged with bribes
Vociferous comments on the part of officials are found around in abundance. For instance, Deputy Prime Minister Dmitry Rogozin and the leader of A Just Russia Party, Sergei Mironov, have come up with a recommendation to equate corruption to high treason.
Sergei Ivanov, the chief of the Presidential Administration Staff, has suggested that the property of embezzlers who are caught red-handed should be confiscated.
There is no special underpinning in the simultaneous propulsion of several corruption scandals at a time, political scientist Vyacheslav Nikonov told the NEWSru.com portal. “Struggle with corruption continues permanently and thousands of people are arrested annually,” he said.
“It simply so happened that several major corruption cases were launched at the same time and the Accounting Chamber stepped up its activity, too maybe, upon instructions from above,” Nikonov said. “The consequences are clear. The higher the status of the officials involved in the scandal, the bigger the number of those involved, and the cases can be started up by in series then.”
Contrary to Nikonov, political analyst Yevgeny Minchenko feels confident that the events unfolding at the moment are but elements of an organized campaign.
“It pursues several objectives at a time,” he said. “On the one hand, the government has to bolster its popularity and fighting with corruption is very instrumental in this sense. On the other hand, the top echelons seek to make the team more controllable and to give the red-tape a slap on the wrist. Last but not least, infighting in the ranks of the elite is going on and each group is trying to utilize each scandal in its own interests.”
President Vladimir Putin’s Press Secretary Dmitry Peskov came up with a commentary on the issue last Saturday.
“Some assertions suggesting that the latest resounding corruption scandals aim to divert public attention are nonsensical and hard to explain for because President Putin has stressed persistently the priority attention his Administration gives to the fighting with corruption,” he said. “The hints saying this is propagandistic stint are absolutely groundless, since this is persistent daily work.”
“Putin has taken up the job of cleansing the political and economic elite,” the oppositionist Novaya Gazeta writes. “It is clear as daylight that the country’s leader is seeking to infuse fresh blood into the system as he ignites corruption scandals. It is not ruled out he will have to reshuffle the entire set of his cadres.”
Quite obviously, the President would like to grab the banner of anticorruption struggle from the oppositionists, Novaya Gazeta says. “The guarantees of immunity are being scrapped and everyone may see police at his or her doorsteps someday from now on.”
The scale of corruption in Russia is traditionally described as giant and as for the annual ratings produced by Transparency International, no one pays attention to them. Foreign investors say corruption puts up the major obstacle to investing in Russia.
“Critics of the Kremlin accuse it of imitating the struggle with corruption that has shot through the whole state system in Russia and impedes heavily the governing of the huge country,” the Lenta.ru news portal says. “However, Russia has for some reason failed so far to ratify Article 20 of the UN Convention against Corruption.”